AFTER the excellent performance in 1995, it was gratifying to see the Irish market continue its bull run into the current year, with the ISEQ reaching an all time high of 2290 before profit taking set in. The question is how much further the market can go?
Dealing on the Dublin market this week was influenced by New York, where the Dow rose 60 points on Tuesday after ATT's massive restructuring gave the blue chip stocks that make up the Dow a huge boost. European markets duly responded but failed to retain their gains.
After hitting a low of 146p towards the end of 1995, Smurfit has had a much better first week of 1996, with the share trading up sharply, mainly in response to an improvement on Wall Street by JS Corp.
The American paper sector has generally been better bid over the past week, but few in the industry are yet prepared to say categorically that the current weakness is just a pause and not an early downward movement in the cycle.
Some analysts still believe that JS Corp is undervalued and attractive at its current trading level between $10 and $10.50. That is still only half JS Corp's all time high of last year and 25 per cent below JS Corp's financial price of $13. But the attitude towards the share has shifted slightly and that can only benefit Smurfit.
Even though Smurfit is now trading 7 per cent above its 1995 low, the share is still a long way off the 200p plus trading levels of the third quarter, and over a third lower than the 200p price when the group bought back 25 million shares at 200p each.
Overall, however, most of the wall of domestic and overseas funds that descended on the Irish market was concentrated on the leaders, and the financials in particular pushed ahead firmly to either reach new highs or go close to new highs. Irish Life, in particular, saw heavy demand while AIB, Irish Permanent. Bank of Ireland, Woodchester and Anglo Irish were all well bid.
Indifferent results from their life assurance subsidiaries did not impact negatively on either AIB or Bank of Ireland, but the decision by AIB's Ark Life subsidiary to radically reorganise its fees structure and the warnings about costs by Bank of Ireland's Lifetime indicate that the domestic life assurance industry is facing a period of radical change.
Bank of Ireland also completed its disengagement from the British life assurance industry with the sale of Lifetime's 9,600 policies for an undisclosed sum.
The announcement that Allegro has hired a new marketing director has been taken as another signal that the distribution group is heading for the market - as long as its bid for Lyons Irish Holdings is successful.
The Lyons sale has become a drawn out affair with bids having lodged with Allied Domecq's adviser, SBC Warburg, last November. Allegro is still seen as front runner for what will be a quantum leap acquisition for the group.
The first set of results of the year - from housebuilder Abbey - proved to be truly dismal, with Abbey being hit badly by the weak British housing market. Expect a raft of profit and earnings downgradings for Abbey over the next week. Grafton became the first acquirer of the year, snapping up three businesses in Britain for a combined £5.8 million.
